BEIJING, May 15, 2009 - Microsoft and authorities in a Chinese city have linked up in the US giant's latest bid to fight rampant software piracy in the key Asian market.

The deal, which the company hopes to be a model for other cities, will see it help Hangzhou develop its IT industry, while officials will encourage the use of genuine software by consumers, government agencies and enterprises.

"In partnering with the municipality of Hangzhou, we are taking a unique approach to improving the IPR (intellectual property rights) environment," Alec Cooper, who helped develop the three-year deal at Microsoft, told reporters.

Counterfeiting is rampant in China. According to the Business Software Alliance, a US-based anti-piracy organisation, 82 percent of all personal computer software sold in China in 2007 was pirated.

Cooper said Microsoft and Hangzhou city would initiate steps such as rewarding enterprises that use legal software, and making sure all schools and PC shopping centres in the city are free from counterfeit software.

Hangzhou, the capital of Zhejiang province, is a major commercial hub in the Shanghai area.

"Hangzhou is the first step. What we see is the cities across China, when planning their economic future, are really focused on building up their knowledge economy, and we'd like to extend it," Cooper said.

The agreement comes after Microsoft's previous measure to try to reduce counterfeiting caused an outcry in China.

The Windows Genuine Advantage program turns computer desktops black every hour if the installed Windows XP operating system fails an authenticity validation test, and alerts the user.

But Chinese users labelled it "unfair" monopoly tactics, with some arguing that Microsoft software was too expensive in China for average incomes, which was why many resorted to pirates.

Cooper acknowledged Microsoft software was priced the same around the world.

"But we do have promotional pricing in China... and where that's appropriate we certainly have tried to address that," he said.